Termination for Cause - Max Fang's Notes

# Termination "for Cause" Below follows the output of [[Deep Research]] on historical examples of politically-motivated abuse of "termination "for Cause" provisions which resulted in the forfeiture of vested stock or options. **Prompt:** *Have there ever been cases of founders, executives, or employees being terminated "with cause" due to likely corporate politics-motivated, fabricated reasons, and succeeding? For example, shoehorning issues of "underperformance" to try to justify this. Please research the annals of corporate history and highlight a few cases where this succeeded (or explain why it has never succeeded, if you don't find any successes.)* # Politically-Motivated “For-Cause” Terminations in Tech Startups In the startup world, a termination “with cause” can strip a founder or employee of unvested equity and severance, treating them as a _“bad leaver.”_ Typically, if someone is fired for cause, no additional stock vests and the company may repurchase or cancel unvested shares ([Founder's Stock - Protecting Founders in a Startup Emerging Technology Company - Morse](https://www.morse.law/news/protecting-legal-interests/#:~:text=In%20the%20event%20the%20founder,and%20to%20deter%20the%20board)). In contrast, being let go _without_ cause often allows one to keep vested equity or receive compensation ([Founder's Stock - Protecting Founders in a Startup Emerging Technology Company - Morse](https://www.morse.law/news/protecting-legal-interests/#:~:text=In%20the%20event%20the%20founder,and%20to%20deter%20the%20board)). This high stakes distinction creates an incentive to label a departure as “for cause.” Below are several U.S. tech industry cases where individuals were terminated for cause under suspect circumstances – often seen as pretextual or driven by internal politics. In each case, the firing was not reversed, and the ousted person lost significant equity as a result. ## Twitter’s Noah Glass – Ousted Founder “Written Out” (2006) Noah Glass, one of Twitter’s originators (he even coined the name), was pushed out in Twitter’s early days amid power struggles. Glass had passionately championed the project when it was a side-experiment within the podcast startup Odeo ([Is the Unfortunate Lesson of Twitter's Forgotten Founder That You Should ALWAYS Sue? - Business Insider](https://www.businessinsider.com/twitter-noah-glass-lawsuit-2011-4#:~:text=It%20seems%20that%20Noah%20Glass,that%20Twitter%20would%20be%20big)). But once Twitter showed promise, co-founder Jack Dorsey allegedly insisted that Glass be removed. With backing from investor-turned-CEO Evan Williams, Glass was quietly forced out and erased from the company’s narrative ([Is the Unfortunate Lesson of Twitter's Forgotten Founder That You Should ALWAYS Sue? - Business Insider](https://www.businessinsider.com/twitter-noah-glass-lawsuit-2011-4#:~:text=It%20seems%20that%20Noah%20Glass,that%20Twitter%20would%20be%20big)). There was no public scandal or clear performance issue – his exit is widely attributed to internal politics and shifting alliances among the founders. Glass “simply faded away,” receiving only a token slice of equity in Twitter in the end ([Is the Unfortunate Lesson of Twitter's Forgotten Founder That You Should ALWAYS Sue? - Business Insider](https://www.businessinsider.com/twitter-noah-glass-lawsuit-2011-4#:~:text=Glass%20was%20then%20pushed%20out,slice%20of%20equity%20in%20Twitter)). _“It’s highly likely that without Noah Glass Twitter wouldn’t exist… [yet] Glass got… ‘screwed,’”_ one retrospective noted ([Is the Unfortunate Lesson of Twitter's Forgotten Founder That You Should ALWAYS Sue? - Business Insider](https://www.businessinsider.com/twitter-noah-glass-lawsuit-2011-4#:~:text=And%20yet)). Unlike Facebook’s ousted early partners who sued and won large settlements, Glass never legally contested his removal ([Is the Unfortunate Lesson of Twitter's Forgotten Founder That You Should ALWAYS Sue? - Business Insider](https://www.businessinsider.com/twitter-noah-glass-lawsuit-2011-4#:~:text=Contrast%20this%20with%20Facebook%27s%20founding%3A,they%20had%20a%20huge%20windfall)) ([Is the Unfortunate Lesson of Twitter's Forgotten Founder That You Should ALWAYS Sue? - Business Insider](https://www.businessinsider.com/twitter-noah-glass-lawsuit-2011-4#:~:text=It%27s%20highly%20likely%20that%20without,screwed)). The termination stood, and by not fighting it, he lost out on the vast majority of the wealth Twitter later generated – a cautionary tale of how a founder can be edged out under the pretext of “restructuring” or personality clash, with cause implied to justify sidelining him. ## Zynga’s Pre-IPO Equity Clawback Scheme (2011) ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/)) _Zynga faced criticism for demanding some early employees surrender unvested stock or be fired “for cause,” a move seen as leveraging performance as a pretext to reclaim equity ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=But%20CEO%20Mark%20Pincus%20allegedly,there%20has%20been%20no%20response)) ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=The%20company%20allegedly%20told%20the,%28The%20story))._ Social gaming startup Zynga notoriously pushed the boundaries of “for cause” termination when CEO Mark Pincus decided that certain early hires had been _too_ richly rewarded in stock grants ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=But%20CEO%20Mark%20Pincus%20allegedly,there%20has%20been%20no%20response)). As Zynga prepared for its IPO, Pincus felt about 30 employees hadn’t performed well enough to justify their equity, even though _he_ had approved those grants ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=But%20CEO%20Mark%20Pincus%20allegedly,there%20has%20been%20no%20response)) ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=According%20to%20the%20report%2C%20last,they%27d%20see%20after%20an%20IPO)). According to reports, management compiled a list of these “underperformers” and delivered an ultimatum: hand back a portion of your unvested shares or be fired and lose **all** your remaining stock ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=The%20company%20allegedly%20told%20the,%28The%20story)). The message was clear – accept a partial forfeiture _voluntarily_ or face a “for cause” termination (for alleged poor performance) that would strip you of everything. This maneuver allowed Zynga to reclaim equity without officially increasing the share count (avoiding dilution of venture investors’ stakes) ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=gifts%20of%20stock%20that%20don%27t,they%27d%20see%20after%20an%20IPO)) ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=perform%20well%20enough%20to%20justify,they%27d%20see%20after%20an%20IPO)). Commentators called it an “arm-twisting” gambit that, while legal under the at-will employment doctrine, smelled of bad faith ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=The%20company%20allegedly%20told%20the,%28The%20story)) ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=think%20twice%20or%20even%20three,a%20position%20at%20the%20company)). After all, _“performance”_ can be highly subjective – perhaps some employees were simply out of favor or clashed with new management ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=think%20twice%20or%20even%20three,a%20position%20at%20the%20company)). In the end, no board or court intervened. Many employees likely complied rather than be fired, and any who refused were let go with cause, losing their promised stock ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=The%20company%20allegedly%20told%20the,%28The%20story)). The incident drew public ire as an example of internal power dynamics (a CEO prioritizing investors over early team members) trumping fairness ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=That%20word%20,a%20position%20at%20the%20company)) ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=think%20twice%20or%20even%20three,a%20position%20at%20the%20company)). The terminations stood and the equity was redistributed, underscoring how _“cause”_ can be used as a pretext to cut people out when money is on the line. ## Uber vs. Anthony Levandowski – Cause Firing Amid Legal Battles (2017) When Uber poached star engineer Anthony Levandowski from Google in 2016 – via acquiring his self-driving truck startup Otto – it promised him a huge payoff (roughly **$680 million** in stock) if he could help turbocharge Uber’s autonomous vehicle program ([Anthony Levandowski Charged With Stealing Google's Self Driving Car Files : NPR](https://www.npr.org/2019/08/27/754895978/former-uber-engineer-charged-with-33-counts-of-trade-secret-theft#:~:text=The%20criminal%20complaint%20filed%20by,the%20ground%20at%20the%20time)). A year later, that relationship spectacularly imploded under the cloud of a trade-secret lawsuit. Google’s Waymo sued Uber, accusing Levandowski of stealing 14,000 confidential files on his way out ([Uber just fired the engineer at the center of its legal fight with Google | Vox](https://www.vox.com/new-money/2017/4/8/15205610/google-uber-lawsuit-explained#:~:text=was%20quickly%20acquired%20by%20Uber)) ([Uber just fired the engineer at the center of its legal fight with Google | Vox](https://www.vox.com/new-money/2017/4/8/15205610/google-uber-lawsuit-explained#:~:text=Waymo%20sued%20Uber%2C%20charging%20that,incrimination%20instead)). During the litigation, Levandowski invoked his Fifth Amendment rights and refused to hand over certain documents, putting Uber in a bind ([Uber just fired the engineer at the center of its legal fight with Google | Vox](https://www.vox.com/new-money/2017/4/8/15205610/google-uber-lawsuit-explained#:~:text=Waymo%20tried%20to%20force%20Levandowski,incrimination%20instead)). Under pressure from a federal judge (who suggested Uber threaten to fire him to compel cooperation) ([Uber just fired the engineer at the center of its legal fight with Google | Vox](https://www.vox.com/new-money/2017/4/8/15205610/google-uber-lawsuit-explained#:~:text=incrimination%20www)), Uber did exactly that – it terminated Levandowski _for cause_ in May 2017, citing his refusal to assist in the internal investigation and legal defense ([Uber just fired the engineer at the center of its legal fight with Google | Vox](https://www.vox.com/new-money/2017/4/8/15205610/google-uber-lawsuit-explained#:~:text=That%20put%20Uber%20in%20an,followed%20through%20on%20the%20threat)) ([Anthony Levandowski - Wikipedia](https://en.wikipedia.org/wiki/Anthony_Levandowski#:~:text=In%20March%202017%2C%20United%20States,lawyers%2C%20publicly%20apologized%20for%20hiring)). This “for cause” firing immediately relieved Uber of any obligation to complete Levandowski’s stock payout. Indeed, by dismissing him, Uber ensured he _“was unable to exercise”_ the rest of his stock options or collect the balance of the Otto acquisition payment ([Silicon Valley startup founder says he booted Elon Musk from company over stock manipulation - San Francisco Business Times](https://www.bizjournals.com/sanfrancisco/news/2025/01/27/elon-musk-booted-from-startup-neurovigil.html#:~:text=,I%20am%20blocked%20on%20his)). Many in Silicon Valley viewed the move as Uber protecting itself: formally the cause was insubordination (non-compliance with the investigation), but effectively it also served to distance Uber from Levandowski’s alleged wrongdoing and save hundreds of millions in equity. The termination was never reversed – in fact Uber publicly apologized for ever hiring Levandowski ([Anthony Levandowski - Wikipedia](https://en.wikipedia.org/wiki/Anthony_Levandowski#:~:text=self,49%20%5D%3A%20255)) – and Levandowski’s attempts to claim compensation fell flat. (He ended up owing Google 179 million179 million after arbitration, leading to bankruptcy, and even faced criminal trade-secret charges ([Anthony Levandowski - Wikipedia](https://en.wikipedia.org/wiki/Anthony_Levandowski#:~:text=final%20arbitration%20hearing%20that%20resulted,53)) ([Anthony Levandowski - Wikipedia](https://en.wikipedia.org/wiki/Anthony_Levandowski#:~:text=refrain%20from%20working%20on%20Lidar,49%20%5D%3A%20255))). This case illustrates how a **cause** firing can be used in a high-stakes power struggle: Uber’s board and leadership chose to sacrifice Levandowski, portraying him as a rogue actor, which conveniently also meant he forfeited the fortune he’d been promised. The backdrop of litigation gave Uber cover, but many observers noted the underlying internal politics – Uber’s zeal to prove its own innocence – were a driving force in the decision to fire him in such a definitive way ([Uber just fired the engineer at the center of its legal fight with Google | Vox](https://www.vox.com/new-money/2017/4/8/15205610/google-uber-lawsuit-explained#:~:text=Levandowski%E2%80%99s%20firing%20removes%20a%20potential,driving%20car%20business)) ([Uber just fired the engineer at the center of its legal fight with Google | Vox](https://www.vox.com/new-money/2017/4/8/15205610/google-uber-lawsuit-explained#:~:text=self)). ## Carta’s Gender Discrimination Fallout – Emily Kramer (2019) Emily Kramer, Vice President of Marketing at equity management startup Carta, was fired in 2019 in what she alleges was retaliation for calling out discrimination. Hired to improve diversity, Kramer found herself the only woman on Carta’s executive team and soon noticed gender-based disparities – she says she was **paid less**, given **fewer stock options**, and excluded from meetings compared to male peers ([3 Top Executives at Carta Raised Concerns About Discrimination - Business Insider](https://www.businessinsider.com/gender-discrimination-lawsuit-carta-vcs-2023-1#:~:text=Kramer%2C%20who%20worked%20at%20Carta,The%20case%20is)). Kramer repeatedly raised concerns internally about the company’s “gender equity gap,” only to be dismissed from her role after pressing the issue one time too many ([3 Top Executives at Carta Raised Concerns About Discrimination - Business Insider](https://www.businessinsider.com/gender-discrimination-lawsuit-carta-vcs-2023-1#:~:text=Kramer%2C%20who%20worked%20at%20Carta,The%20case%20is)). According to her lawsuit, she was ultimately fired _because_ she kept spotlighting these problems (which the CEO, Henry Ward, purportedly downplayed) ([3 Top Executives at Carta Raised Concerns About Discrimination - Business Insider](https://www.businessinsider.com/gender-discrimination-lawsuit-carta-vcs-2023-1#:~:text=Kramer%2C%20who%20worked%20at%20Carta,The%20case%20is)) ([3 Top Executives at Carta Raised Concerns About Discrimination - Business Insider](https://www.businessinsider.com/gender-discrimination-lawsuit-carta-vcs-2023-1#:~:text=promotion%20because%20of%20her%20gender,next%20month%20in%20San%20Francisco)). Carta’s official stance was that her claims were unfounded – the company denied any wrongdoing and maintained it was _“committed to equality in the workplace”_ ([3 Top Executives at Carta Raised Concerns About Discrimination - Business Insider](https://www.businessinsider.com/gender-discrimination-lawsuit-carta-vcs-2023-1#:~:text=woman%20on%20Carta%27s%20executive%20team%2C,next%20month%20in%20San%20Francisco)) ([3 Top Executives at Carta Raised Concerns About Discrimination - Business Insider](https://www.businessinsider.com/gender-discrimination-lawsuit-carta-vcs-2023-1#:~:text=promotion%20because%20of%20her%20gender,next%20month%20in%20San%20Francisco)). In practice, however, her abrupt termination sent a chilling message. By labeling her a bad fit and terminating her (effectively a cause scenario from her perspective), Carta not only removed a vocal critic but also deprived her of unvested equity at a time when the startup’s valuation was soaring. Kramer responded with a **gender discrimination and retaliation lawsuit** in California. The case garnered attention as it revealed Carta’s board had been informed – she had sent her complaints to several board members, including prominent VCs ([3 Top Executives at Carta Raised Concerns About Discrimination - Business Insider](https://www.businessinsider.com/gender-discrimination-lawsuit-carta-vcs-2023-1#:~:text=Johnson%27s%20and%20Talton%27s%20complaints%20were,person%20familiar%20with%20the%20complaints)) – yet no one intervened to reverse the firing. In early 2023, just before trial, Carta settled with Kramer out of court ([Carta Settles Gender Discrimination Lawsuit With Former Executive - Business Insider](https://www.businessinsider.com/carta-settles-gender-discrimination-lawsuit-with-former-executive-2023-2#:~:text=,embarrassing%20records%20of%20company%20executives)) ([Carta Settles Gender Discrimination Lawsuit With Former Executive - Business Insider](https://www.businessinsider.com/carta-settles-gender-discrimination-lawsuit-with-former-executive-2023-2#:~:text=A%20lawsuit%20brought%20by%20former,as%20part%20of%20the%20settlement)). The terms were undisclosed and the company admitted no fault, but the timing (and an earlier multi-million-dollar settlement with another female executive) suggested Carta wanted to avoid a public verdict ([Carta Settles Gender Discrimination Lawsuit With Former Executive - Business Insider](https://www.businessinsider.com/carta-settles-gender-discrimination-lawsuit-with-former-executive-2023-2#:~:text=scheduled%20to%20go%20to%20court,embarrassing%20records%20of%20company%20executives)) ([Carta Settles Gender Discrimination Lawsuit With Former Executive - Business Insider](https://www.businessinsider.com/carta-settles-gender-discrimination-lawsuit-with-former-executive-2023-2#:~:text=While%20the%20Kramer%20case%20has,legal%20disputes%20with%20the%20company)). Importantly, the settlement did not undo her termination – Kramer did not get her job or lost stock back. Her case highlights how “cause” can be implied as a pretext (e.g. claiming an employee is disruptive or underperforming) when the real issue is that employee’s **whistleblowing about internal biases**. The power dynamics were clear: leadership closed ranks, and the board stood by the CEO, leaving a lone executive to fight for vindication after-the-fact. ## Carta CTO Jerry Talton – Whistleblower Punished (2022) A few years after Kramer’s ouster, Carta was in headlines again for another contentious firing – this time involving **Jerry Talton**, the company’s Chief Technology Officer. In late 2022, Talton privately alerted Carta’s board and general counsel to serious misconduct he had observed under CEO Henry Ward’s leadership (behavior he believed was unethical, potentially illegal, and harmful to the business) ([When Your Company Tries to Cancel You | by Jerry Talton | Medium](https://medium.com/@jerrytalton/when-your-company-tries-to-cancel-you-a93a9a8e5d86#:~:text=entire%20Carta%20board%20and%20the,week%20later%2C%20Carta%20sued%20me)). Rather than being thanked, Talton was immediately suspended and subjected to an aggressive internal investigation led by an outside law firm (Paul, Weiss, headed by former U.S. Attorney General Loretta Lynch) ([3 Top Executives at Carta Raised Concerns About Discrimination - Business Insider](https://www.businessinsider.com/gender-discrimination-lawsuit-carta-vcs-2023-1#:~:text=Following%20Talton%27s%20complaint%2C%20Carta%20hired,the%20firm%2C%20the%20person%20said)). Just days after he sat for an eight-hour interview with investigators, Talton was abruptly fired **“for cause”** – on the Friday before Christmas 2022 ([When Your Company Tries to Cancel You | by Jerry Talton | Medium](https://medium.com/@jerrytalton/when-your-company-tries-to-cancel-you-a93a9a8e5d86#:~:text=%E2%80%94%20not%20Ward%20nor%20anyone,week%20later%2C%20Carta%20sued%20me)). Carta then went a step further, filing a lawsuit against Talton a week later ([When Your Company Tries to Cancel You | by Jerry Talton | Medium](https://medium.com/@jerrytalton/when-your-company-tries-to-cancel-you-a93a9a8e5d86#:~:text=%E2%80%94%20not%20Ward%20nor%20anyone,week%20later%2C%20Carta%20sued%20me)). The company accused him of misconduct (including allegedly making secret audio recordings of executives) and sought to block him from sharing any damaging information ([Carta Settles Gender Discrimination Lawsuit With Former Executive - Business Insider](https://www.businessinsider.com/carta-settles-gender-discrimination-lawsuit-with-former-executive-2023-2#:~:text=and%20conduct%20valuations)) ([Carta Settles Gender Discrimination Lawsuit With Former Executive - Business Insider](https://www.businessinsider.com/carta-settles-gender-discrimination-lawsuit-with-former-executive-2023-2#:~:text=While%20the%20Kramer%20case%20has,legal%20disputes%20with%20the%20company)). From Talton’s perspective, this was blatant retaliation: he had blown the whistle on internal problems, and Ward moved to _“cancel”_ him and discredit his potential testimony ([When Your Company Tries to Cancel You | by Jerry Talton | Medium](https://medium.com/@jerrytalton/when-your-company-tries-to-cancel-you-a93a9a8e5d86#:~:text=for%20wrongful%20discharge%2C%20retaliation%2C%20breach,working%20as%20the%20company%E2%80%99s%20Chief)) ([When Your Company Tries to Cancel You | by Jerry Talton | Medium](https://medium.com/@jerrytalton/when-your-company-tries-to-cancel-you-a93a9a8e5d86#:~:text=Technology%20Officer,%C2%B9)). By terminating him for cause, Carta also ensured Talton’s unvested shares and options would be forfeited – a financially devastating consequence given Carta’s multi-billion valuation. Talton responded with his own lawsuit against Carta and Ward, alleging wrongful termination, defamation, and retaliation ([When Your Company Tries to Cancel You | by Jerry Talton | Medium](https://medium.com/@jerrytalton/when-your-company-tries-to-cancel-you-a93a9a8e5d86#:~:text=for%20wrongful%20discharge%2C%20retaliation%2C%20breach,working%20as%20the%20company%E2%80%99s%20Chief)) ([When Your Company Tries to Cancel You | by Jerry Talton | Medium](https://medium.com/@jerrytalton/when-your-company-tries-to-cancel-you-a93a9a8e5d86#:~:text=suit%20comes%20in%20response%20to,%C2%B9)). As of the latest reports, the firing stands and the legal battle continues in court/arbitration. Carta’s board did not reinstate him, effectively siding with the CEO’s version of events. Notably, Ward took the unusual step of writing a public post on Medium to justify Carta’s actions, painting an unspecified former employee (clearly Talton) as toxic – a _“bizarre…diatribe”_ that was widely derided and only drew more negative attention to Carta ([When Your Company Tries to Cancel You | by Jerry Talton | Medium](https://medium.com/@jerrytalton/when-your-company-tries-to-cancel-you-a93a9a8e5d86#:~:text=Technology%20Officer,%C2%B9)). That PR misstep aside, the _official_ reason for Talton’s firing remains whatever cause was documented internally (possibly violating company policy or some claim of wrongdoing). But given the sequence – whistleblowing, then immediate “for cause” firing and a smear campaign – many commentators see this as a textbook case of using a fabricated cause to eliminate an internal threat. It underscores how a startup CEO with board control can utilize cause clauses to consolidate power: by removing dissent and ensuring a whistleblower not only loses their job but also their equity, pouring salt in the wound. ## Better.com’s SPAC Whistleblower – Sarah Pierce (2022) Online mortgage startup Better.com became infamous in late 2021 when CEO Vishal Garg fired 900 employees on a Zoom call with little warning. But another saga was unfolding behind the scenes: **Sarah Pierce**, Better’s Executive Vice President for Sales and Operations, raised alarms that Garg and the company were misleading investors about Better’s financial health during its planned SPAC merger. In particular, Pierce felt Garg was making overly rosy revenue projections and downplaying problems to ensure the SPAC deal (valued around $7.7 billion) wouldn’t collapse ([Former executive alleges Better.com, CEO misled investors to ensure SPAC deal | Reuters](https://www.reuters.com/markets/deals/former-executive-alleges-bettercom-ceo-misled-investors-ensure-spac-deal-2022-06-08/#:~:text=Sarah%20Pierce%2C%20a%20former%20executive,due%20to%20its%20financial%20condition)) ([Former executive alleges Better.com, CEO misled investors to ensure SPAC deal | Reuters](https://www.reuters.com/markets/deals/former-executive-alleges-bettercom-ceo-misled-investors-ensure-spac-deal-2022-06-08/#:~:text=SoftBank,due%20to%20its%20financial%20condition)). According to her lawsuit, when Pierce voiced these concerns to Garg and other executives, she faced hostility – and was ultimately _pushed out of the company in February 2022_ ([Former executive alleges Better.com, CEO misled investors to ensure SPAC deal | Reuters](https://www.reuters.com/markets/deals/former-executive-alleges-bettercom-ceo-misled-investors-ensure-spac-deal-2022-06-08/#:~:text=Pierce%20said%20in%20the%20lawsuit,She%20is%20seeking%20financial%20compensation)). The termination was ostensibly for performance or “not being on board” with leadership, but Pierce claims it was **retaliation** for her blowing the whistle on deceptive investor communications ([Former executive alleges Better.com, CEO misled investors to ensure SPAC deal | Reuters](https://www.reuters.com/markets/deals/former-executive-alleges-bettercom-ceo-misled-investors-ensure-spac-deal-2022-06-08/#:~:text=Pierce%20said%20in%20the%20lawsuit,She%20is%20seeking%20financial%20compensation)). In June 2022, she sued Better.com and Garg in federal court, accusing them of securities fraud (for the misrepresentations) and wrongful termination ([Former executive alleges Better.com, CEO misled investors to ensure SPAC deal | Reuters](https://www.reuters.com/markets/deals/former-executive-alleges-bettercom-ceo-misled-investors-ensure-spac-deal-2022-06-08/#:~:text=June%207%20%28Reuters%29%20,firm%27s%20financial%20prospects%20and%20performance)) ([Former executive alleges Better.com, CEO misled investors to ensure SPAC deal | Reuters](https://www.reuters.com/markets/deals/former-executive-alleges-bettercom-ceo-misled-investors-ensure-spac-deal-2022-06-08/#:~:text=Pierce%20said%20in%20the%20lawsuit,She%20is%20seeking%20financial%20compensation)). Better’s response was aggressive: the company **denied all claims**, insisted Pierce’s allegations were “without merit,” and countersued her over certain company loans ([Former executive alleges Better.com, CEO misled investors to ensure SPAC deal | Reuters](https://www.reuters.com/markets/deals/former-executive-alleges-bettercom-ceo-misled-investors-ensure-spac-deal-2022-06-08/#:~:text=Sign%20up%20here)) ([Better Settles with Former Executive Who Filed Whistleblower Suit - Inman](https://www.inman.com/2024/05/07/better-settles-with-former-exec-who-filed-whistleblower-suit/#:~:text=Digital%20mortgage%20lender%20Better%20has,she%20could%20exercise%20stock%20options)). Notably, while at Better, Pierce had borrowed money from the company to exercise some stock options (a common practice); after firing her, Better demanded immediate repayment, arguing that her for-cause termination nullified any benefit of those shares. In January 2024, a court sided with Better on this issue, entering a 2.76 million2.76 million judgment against Pierce for the loan amount ([Better Settles with Former Executive Who Filed Whistleblower Suit - Inman](https://www.inman.com/2024/05/07/better-settles-with-former-exec-who-filed-whistleblower-suit/#:~:text=Digital%20mortgage%20lender%20Better%20has,she%20could%20exercise%20stock%20options)) ([Better Settles with Former Executive Who Filed Whistleblower Suit - Inman](https://www.inman.com/2024/05/07/better-settles-with-former-exec-who-filed-whistleblower-suit/#:~:text=Court%20documents%20show%20that%20Pierce,Pierce%20dropping%20her%20own%20lawsuit)). For Pierce, this was salt in the wound – not only had she lost her high-ranking job and future stock, she now owed the company money for shares she was essentially never allowed to fully own. Facing this pressure, Pierce and Better.com reached a settlement in early 2024 to drop both her whistleblower lawsuit and the company’s claims ([Better Settles with Former Executive Who Filed Whistleblower Suit - Inman](https://www.inman.com/2024/05/07/better-settles-with-former-exec-who-filed-whistleblower-suit/#:~:text=Digital%20mortgage%20lender%20Better%20has,she%20could%20exercise%20stock%20options)) ([Better Settles with Former Executive Who Filed Whistleblower Suit - Inman](https://www.inman.com/2024/05/07/better-settles-with-former-exec-who-filed-whistleblower-suit/#:~:text=Court%20documents%20show%20that%20Pierce,Pierce%20dropping%20her%20own%20lawsuit)). The details remain confidential, but Pierce’s voluntary dismissal of her case suggests no reinstatement or public vindication was obtained ([Former top executive withdraws lawsuit against Better.com and its ...](https://www.housingwire.com/articles/former-top-executive-withdraws-lawsuit-against-better-com-and-its-founder/#:~:text=Former%20top%20executive%20withdraws%20lawsuit,company%20and%20founder%20Vishal%20Garg)) ([Former top executive withdraws lawsuit against Better.com and its ...](https://www.housingwire.com/articles/former-top-executive-withdraws-lawsuit-against-better-com-and-its-founder/#:~:text=Sarah%20Pierce%2C%20a%20former%20executive,company%20and%20founder%20Vishal%20Garg)). Garg, backed by Better’s board (which included major investor SoftBank), kept his position throughout. The **power dynamics** were stark: a CEO known for erratic and ruthless behavior (one claim had him telling colleagues that _“President Biden will die of COVID,”_ implying a pandemic boon to business ([Better CEO Vishal Garg allegedly said 'Biden will die of COVID'](https://nypost.com/2022/06/09/better-ceo-vishal-garg-allegedly-said-biden-will-die-of-covid/#:~:text=Better%20CEO%20Vishal%20Garg%20allegedly,claimed%20its%20sales%20would))) was protected, while an executive who challenged the company’s truthfulness was ousted with cause. By using a cause justification (likely framed as Pierce not meeting expectations or not being a “team player”), Better could both retaliate and ensure Pierce’s equity stake was wiped out. Despite regulatory scrutiny – the SEC reportedly opened a probe after her allegations ([Better.com Misled Investors Ahead of Stalled SPAC Deal ... - WSJ](https://www.wsj.com/articles/better-com-misled-investors-ahead-of-stalled-spac-deal-former-executive-alleges-11654642467#:~:text=WSJ%20www,financial%20filings%20and%20other%20representations)) – Pierce’s firing was never reversed. This case exemplifies how internal politics at a startup (especially one under the gun to go public) can lead to a scapegoating: the narrative of “underperformance” or “misconduct” is used to mask what looks, from the outside, like an attempt to silence a dissenting voice and avoid accountability. ## Elon Musk vs. NeuroVigil – Investor Ousted for Cause (2021) Not only employees can fall victim to politically motivated “for cause” ousters – sometimes even powerful investors find themselves on the receiving end. In a little-known episode from 2021, **Elon Musk** was effectively fired _with cause_ from the board (or advisory role) of **NeuroVigil**, a San Diego-based brain tech startup. NeuroVigil’s founder and CEO, Dr. Philip Low, had welcomed Musk as an early backer and advisor. But as Musk’s interest in brain-machine interfaces grew (he would go on to start Neuralink, a potential competitor), tensions arose. Low alleges that Musk attempted to **manipulate NeuroVigil’s stock** behind the scenes – presumably to increase his ownership or influence – and even tried to “take over the company outright” at one point ([Silicon Valley startup founder says he booted Elon Musk from company over stock manipulation - San Francisco Business Times](https://www.bizjournals.com/sanfrancisco/news/2025/01/27/elon-musk-booted-from-startup-neurovigil.html#:~:text=Musk%20was%20the%20principal%20investor,on%20its%20business%20advisor%20board)) ([Silicon Valley startup founder says he booted Elon Musk from company over stock manipulation - San Francisco Business Times](https://www.bizjournals.com/sanfrancisco/news/2025/01/27/elon-musk-booted-from-startup-neurovigil.html#:~:text=Low%20claimed%20that%20Musk%20founded,take%20over%20the%20company%20outright)). In response, Low says he took the drastic step of firing Musk from any involvement in NeuroVigil, citing the stock manipulation as misconduct. Low announced publicly that _“After Elon tried to manipulate [NeuroVigil]’s stock in 2021, I fired him with cause, and he was unable to exercise his stock options”_ ([Silicon Valley startup founder says he booted Elon Musk from company over stock manipulation - San Francisco Business Times](https://www.bizjournals.com/sanfrancisco/news/2025/01/27/elon-musk-booted-from-startup-neurovigil.html#:~:text=CEO%20Philip%20Low%20posted%20a,during%20a%20recent%20Trump%20rally)) ([Silicon Valley startup founder says he booted Elon Musk from company over stock manipulation - San Francisco Business Times](https://www.bizjournals.com/sanfrancisco/news/2025/01/27/elon-musk-booted-from-startup-neurovigil.html#:~:text=,I%20am%20blocked%20on%20his)). This statement (posted by Low on his Facebook page) made clear that Musk’s removal was not cordial – by invoking “cause,” Low voided Musk’s remaining options or equity rights in the startup. The termination stood; Musk did not sue or contest it, at least not publicly. Given Musk’s high profile, this case attracted some media attention if only due to the irony: the world’s richest man, usually in control, was _banished_ from a startup and stripped of his stake. While the exact details of Musk’s alleged stock manipulation aren’t public, the context suggests a power struggle. Low implied that Musk, unable to “conquer” NeuroVigil, went on to create Neuralink as a rival instead ([Silicon Valley startup founder says he booted Elon Musk from company over stock manipulation - San Francisco Business Times](https://www.bizjournals.com/sanfrancisco/news/2025/01/27/elon-musk-booted-from-startup-neurovigil.html#:~:text=medical%20functions%2C%20and%20he%20previously,on%20its%20business%20advisor%20board)). This is a rare example of a founder wielding a cause termination against an influential investor – essentially accusing the investor of improper behavior (possibly as a pretext to block a hostile takeover). No board revolt occurred in Musk’s favor; Low had control and exercised it. The **power dynamics** were one-on-one: founder vs. investor, with the founder using a cause justification to protect his company’s independence. In the end, Musk lost whatever unvested equity or options he had in NeuroVigil (likely a trivial financial loss for him, but symbolically significant). The episode underscores that “for cause” terminations, even if ostensibly for serious reasons like stock manipulation, can carry a whiff of personal or strategic motives – in this case, preventing a powerful figure from muscling in on a startup. Low’s candid framing of it in political terms (referring to Musk’s later “Nazi salute” controversy and saying any friendship was ended ([Silicon Valley startup founder says he booted Elon Musk from company over stock manipulation - San Francisco Business Times](https://www.bizjournals.com/sanfrancisco/news/2025/01/27/elon-musk-booted-from-startup-neurovigil.html#:~:text=Facebook%2C%20detailing%20his%20past%20friendship,during%20a%20recent%20Trump%20rally)) ([Silicon Valley startup founder says he booted Elon Musk from company over stock manipulation - San Francisco Business Times](https://www.bizjournals.com/sanfrancisco/news/2025/01/27/elon-musk-booted-from-startup-neurovigil.html#:~:text=,I%20am%20blocked%20on%20his))) further suggests the split was as much personal as it was professional. Regardless, Musk’s ouster was permanent and serves as a high-profile footnote in the discussion of cause terminations. --- **Sources:** - Business Insider – **“Twitter’s Forgotten Founder”** (Noah Glass) ([Is the Unfortunate Lesson of Twitter's Forgotten Founder That You Should ALWAYS Sue? - Business Insider](https://www.businessinsider.com/twitter-noah-glass-lawsuit-2011-4#:~:text=It%20seems%20that%20Noah%20Glass,that%20Twitter%20would%20be%20big)) ([Is the Unfortunate Lesson of Twitter's Forgotten Founder That You Should ALWAYS Sue? - Business Insider](https://www.businessinsider.com/twitter-noah-glass-lawsuit-2011-4#:~:text=And%20yet)) - CBS News – **“Zynga to employees: Drop those stock shares”** (Mark Pincus clawback) ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=But%20CEO%20Mark%20Pincus%20allegedly,there%20has%20been%20no%20response)) ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=The%20company%20allegedly%20told%20the,%28The%20story)) - CBS News (analysis) – Discussion of performance pretext at Zynga ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=That%20word%20,a%20position%20at%20the%20company)) ( [Zynga to employees: Drop those stock shares - CBS News](https://www.cbsnews.com/news/zynga-to-employees-drop-those-stock-shares/#:~:text=think%20twice%20or%20even%20three,a%20position%20at%20the%20company)) - NPR / AP – **“Former Uber Engineer Charged… (Levandowski)”** (Uber firing and lawsuit context) ([Anthony Levandowski Charged With Stealing Google's Self Driving Car Files : NPR](https://www.npr.org/2019/08/27/754895978/former-uber-engineer-charged-with-33-counts-of-trade-secret-theft#:~:text=The%20lawsuit%20between%20the%20two,was%20subsequently%20fired%20from%20Uber)) ([Anthony Levandowski Charged With Stealing Google's Self Driving Car Files : NPR](https://www.npr.org/2019/08/27/754895978/former-uber-engineer-charged-with-33-counts-of-trade-secret-theft#:~:text=The%20criminal%20complaint%20filed%20by,the%20ground%20at%20the%20time)) - Vox – **“Uber just fired the engineer at the center of its legal fight…”** (Levandowski cause firing) ([Uber just fired the engineer at the center of its legal fight with Google | Vox](https://www.vox.com/new-money/2017/4/8/15205610/google-uber-lawsuit-explained#:~:text=incrimination%20www)) ([Uber just fired the engineer at the center of its legal fight with Google | Vox](https://www.vox.com/new-money/2017/4/8/15205610/google-uber-lawsuit-explained#:~:text=Levandowski%E2%80%99s%20firing%20removes%20a%20potential,driving%20car%20business)) - Wikipedia – _“Anthony Levandowski”_ (Uber apology, arbitration details) ([Anthony Levandowski - Wikipedia](https://en.wikipedia.org/wiki/Anthony_Levandowski#:~:text=In%20March%202017%2C%20United%20States,lawyers%2C%20publicly%20apologized%20for%20hiring)) ([Anthony Levandowski - Wikipedia](https://en.wikipedia.org/wiki/Anthony_Levandowski#:~:text=self,49%20%5D%3A%20255)) - Business Insider – **“3 Top Executives at Carta Raised Concerns…”** (Carta internal complaints, Kramer/Talton context) ([3 Top Executives at Carta Raised Concerns About Discrimination - Business Insider](https://www.businessinsider.com/gender-discrimination-lawsuit-carta-vcs-2023-1#:~:text=Kramer%2C%20who%20worked%20at%20Carta,The%20case%20is)) ([3 Top Executives at Carta Raised Concerns About Discrimination - Business Insider](https://www.businessinsider.com/gender-discrimination-lawsuit-carta-vcs-2023-1#:~:text=Following%20Talton%27s%20complaint%2C%20Carta%20hired,the%20firm%2C%20the%20person%20said)) - Business Insider – **“Carta settles lawsuit with former executive…”** (Emily Kramer settlement) ([Carta Settles Gender Discrimination Lawsuit With Former Executive - Business Insider](https://www.businessinsider.com/carta-settles-gender-discrimination-lawsuit-with-former-executive-2023-2#:~:text=scheduled%20to%20go%20to%20court,embarrassing%20records%20of%20company%20executives)) ([Carta Settles Gender Discrimination Lawsuit With Former Executive - Business Insider](https://www.businessinsider.com/carta-settles-gender-discrimination-lawsuit-with-former-executive-2023-2#:~:text=While%20the%20Kramer%20case%20has,legal%20disputes%20with%20the%20company)) - Medium (Jerry Talton) – **“When Your Company Tries to Cancel You”** (Talton’s account of his firing) ([When Your Company Tries to Cancel You | by Jerry Talton | Medium](https://medium.com/@jerrytalton/when-your-company-tries-to-cancel-you-a93a9a8e5d86#:~:text=entire%20Carta%20board%20and%20the,week%20later%2C%20Carta%20sued%20me)) ([When Your Company Tries to Cancel You | by Jerry Talton | Medium](https://medium.com/@jerrytalton/when-your-company-tries-to-cancel-you-a93a9a8e5d86#:~:text=%E2%80%94%20not%20Ward%20nor%20anyone,week%20later%2C%20Carta%20sued%20me)) - Business Insider – **“Carta suing its own CTO”** (Talton allegations) ([Carta Settles Gender Discrimination Lawsuit With Former Executive - Business Insider](https://www.businessinsider.com/carta-settles-gender-discrimination-lawsuit-with-former-executive-2023-2#:~:text=and%20conduct%20valuations)) ([Carta Settles Gender Discrimination Lawsuit With Former Executive - Business Insider](https://www.businessinsider.com/carta-settles-gender-discrimination-lawsuit-with-former-executive-2023-2#:~:text=While%20the%20Kramer%20case%20has,legal%20disputes%20with%20the%20company)) - Axios – **“Carta CEO’s self-inflicted PR crisis”** (Ward’s email/letter fallout) ([Carta CEO Henry Ward fuels negative news cycle with unorthodox customer email](https://www.axios.com/2023/10/26/carta-negative-press-email#:~:text=Catch%20up%20quick%3A%20Carta%2C%20a,Axios%20is%20a%20Carta%20client)) ([Carta CEO Henry Ward fuels negative news cycle with unorthodox customer email](https://www.axios.com/2023/10/26/carta-negative-press-email#:~:text=Reality%20check%3A%20Many%20customers%20were,but%20to%20the%20company%27s%20detriment)) - Reuters – **“Former executive alleges Better.com misled investors…”** (Pierce’s whistleblower lawsuit) ([Former executive alleges Better.com, CEO misled investors to ensure SPAC deal | Reuters](https://www.reuters.com/markets/deals/former-executive-alleges-bettercom-ceo-misled-investors-ensure-spac-deal-2022-06-08/#:~:text=Sarah%20Pierce%2C%20a%20former%20executive,due%20to%20its%20financial%20condition)) ([Former executive alleges Better.com, CEO misled investors to ensure SPAC deal | Reuters](https://www.reuters.com/markets/deals/former-executive-alleges-bettercom-ceo-misled-investors-ensure-spac-deal-2022-06-08/#:~:text=Pierce%20said%20in%20the%20lawsuit,She%20is%20seeking%20financial%20compensation)) - Inman News – **“Better settles with former exec…”** (Pierce case resolution and equity loan payback) ([Better Settles with Former Executive Who Filed Whistleblower Suit - Inman](https://www.inman.com/2024/05/07/better-settles-with-former-exec-who-filed-whistleblower-suit/#:~:text=Digital%20mortgage%20lender%20Better%20has,she%20could%20exercise%20stock%20options)) ([Better Settles with Former Executive Who Filed Whistleblower Suit - Inman](https://www.inman.com/2024/05/07/better-settles-with-former-exec-who-filed-whistleblower-suit/#:~:text=Pierce%20sued%20Better%20in%20June,pursued%20plans%20to%20go%20public)) - Reuters – **“Better.com misled investors ahead of SPAC, exec says”** (lawsuit filing details) ([Former executive alleges Better.com, CEO misled investors to ensure SPAC deal | Reuters](https://www.reuters.com/markets/deals/former-executive-alleges-bettercom-ceo-misled-investors-ensure-spac-deal-2022-06-08/#:~:text=SoftBank,due%20to%20its%20financial%20condition)) ([Former executive alleges Better.com, CEO misled investors to ensure SPAC deal | Reuters](https://www.reuters.com/markets/deals/former-executive-alleges-bettercom-ceo-misled-investors-ensure-spac-deal-2022-06-08/#:~:text=Pierce%20said%20in%20the%20lawsuit,She%20is%20seeking%20financial%20compensation)) - S.F. Business Times – **“Founder says he booted Elon Musk…”** (NeuroVigil incident) ([Silicon Valley startup founder says he booted Elon Musk from company over stock manipulation - San Francisco Business Times](https://www.bizjournals.com/sanfrancisco/news/2025/01/27/elon-musk-booted-from-startup-neurovigil.html#:~:text=CEO%20Philip%20Low%20posted%20a,during%20a%20recent%20Trump%20rally)) ([Silicon Valley startup founder says he booted Elon Musk from company over stock manipulation - San Francisco Business Times](https://www.bizjournals.com/sanfrancisco/news/2025/01/27/elon-musk-booted-from-startup-neurovigil.html#:~:text=,I%20am%20blocked%20on%20his)) - **Legal context** (founder equity & cause): Morse law article ([Founder's Stock - Protecting Founders in a Startup Emerging Technology Company - Morse](https://www.morse.law/news/protecting-legal-interests/#:~:text=In%20the%20event%20the%20founder,and%20to%20deter%20the%20board)) (cause vs. without-cause vesting); Humphreys law briefing (leaver provisions) ([Founder's Stock - Protecting Founders in a Startup Emerging Technology Company - Morse](https://www.morse.law/news/protecting-legal-interests/#:~:text=In%20the%20event%20the%20founder,and%20to%20deter%20the%20board)).